by Jarrett Renshaw (Reuters) Throughout 2016 and 2017, a rail terminal built to accept crude oil for the largest East Coast refinery often sat idle, with few trains showing up to unload.

Although little oil flowed, plenty of money did.

Under a deal Philadelphia Energy Solutions (PES) signed in 2015, the refiner paid minimum quarterly payments of $30 million to terminal owner North Yard Logistics LP – even if little crude arrived. Much of that cash, in turn, flowed to the investors that own both PES and North Yard, led by the Carlyle Group, a global private equity firm with $178 billion in assets.

The deal in effect guaranteed lucrative payouts to Carlyle regardless of whether the refinery benefitted from the arrangement. When oil market conditions made the rail shipments unprofitable later that year, the refinery took heavy losses while its investors continued to collect large distributions for two more years.

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PES has blamed its bankruptcy on environmental regulations that require all U.S. refiners to cover the costs of blending corn-based ethanol into the nation’s gasoline. But the ill-fated train terminal deal and other large payouts to investors played key roles in the refiner’s collapse, according to filings and five current or former PES employees who were involved in the refinery’s decision-making.

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PES had $600 million in debt and $43 million in cash on hand when it filed bankruptcy last month. It now hopes to restructure and continue operations, which employ about 1,100 people.

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The corn and ethanol lobby has pushed back on the argument that biofuels regulation sunk PES, pointing out that other refiners governed by the same law are raking in their highest profits in years. READ MORE

Excerpt from the Dallas Morning News: This is about showcasing opposition to federal ethanol mandates — a nonpartisan article of faith in corn country, and a deeply unpopular policy in the Texas oil patch. The Texas primary is two weeks away, and Cruz is busy seeking nomination to a second term.

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The Iowa GOP has demanded Cruz lift the Northey blockade, and state chairman Jeff Kaufmann, in a letter dated Monday, urged him to back down. “Your action is harmful to Iowans and our agricultural industry at large, and accomplishes nothing other than it allows you to secure a personal political victory in an election year,” he wrote.

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Independent analysts and Iowa corn advocates question PES’s effort to blame the fuel mandates for its woes, noting that plenty of other refiners have managed to cope without going bankrupt.

Grassley issued a four-page memo attacking the claim, instead pointing to rising crude oil costs and PES’s decision to buy the credits rather than upgrade its facilities so it could blend ethanol as many competitors have done. He also argued that since refiners can pass higher costs to consumers, the real issue is bungled management — a claim the company and its union dispute.

“I’m concerned anytime an American’s job would be lost,” Grassley said. “I’m confident that the Renewable Fuel Standard isn’t harming refineries, that other factors are at work, and that the RFS law is working as Congress intended.” READ MORE